Agenda item

[To be introduced by the Cabinet Member for Resources and Culture. Report of the Assistant Director for Finance] Cabinet will be asked to  consider a range of indicators relevant to the Council’s overall financial health. These include the forecast financial revenue and capital outturns for 2015/16 based on actual performance to 31 May 2015.Cabinet will also consider the proposed management actions set out in this report and approve the budget adjustments (virements) in Appendix 1 as required by Financial Regulations.

The Cabinet Member for Resources and Culture introduced the report which contained a range of indicators relevant to the Council’s overall financial health. He further highlighted the need to make a potential £3.5m in year budget reduction as a result of the Government’s recent budget package and government reductions to the Public Health grant.  Cabinet noted the overspend in Children’s and Adult services budget and the work being undertaken to reduce these overspends. There would be a further report back in October on the budget position relating to these service areas. The Cabinet Member would also be working with officers on improving  Council tax collection rates to be line with  London average performance indicators

In response to Cllr Engert’s question on receiving a breakdown of the overspend in Children’s services and Adult Social Care, this was set out at section 5.2.8 and included the high level measures to mitigate against overspend. In particular, reducing the use of agency staff and better supporting clients to access benefits.  Cllr Arthur was happy to meet with the Leader of the Opposition to further discuss the details of the measures if required.

In response to Cllr Engert’s question about the required return of capital receipts relating to RTB and the cost of the refund to the Council; the criteria for using the RTB receipts was difficult, for all Councils, to meet due to need to commit significant capital sums to match the income from RTB [30% income of the sale of the property would need to met with 70% top up by the Council] and at the moment the Council were striving to maximise use of the RTB receipts.  .  It was confirmed that if the Council had to return RTB receipts, then interest will be payable. Agreed that the AD for Finance provide the Opposition Leader with a full written response.

In response to the question on business rate valuations, this was completed by central government and if the outcome was not acceptable the Council had the option of making a legal challenge.

In further response to the question on the exposure of the Council to LOBO’s [Lender option borrowing options], this was a commonly favoured financial mechanisms used by Councils .The Council did not have a large exposure to these forms of investments and the AD for Finance would write back to the Leader of the Opposition with a fuller response.

RESOLVED

1. To note  the  report and the progress being made against the Council’s 2015/16 budget in respect of net revenue and capital expenditure;
2. To approve the budget changes (virements), and note the transfers to/ from reserves approved by the Chief Financial Officer, as set out in Appendix 1;
3. To note the potential use of the Strategic Risk Reserve to mitigate the Council’s overall revenue position; and,
4. Maintain under review the key risks and issues identified in this report.

Alternative options considered

This report proposes that the Cabinet considers the financial position for 2015/16 in line with existing procedures. However, for the first time it also includes enhanced financial information and comparisons, drawn from work undertaken by the Local Government Association (LGA) to give the Cabinet a more rounded view of the Council’s financial position.

A risk based approach to budget monitoring has been developed in order to manage the Council’s finances at a time of economic and financial uncertainty including additional benchmarking information.

Cabinet could choose to adopt a less rigorous regime and examine the financial position at a later stage. Projections could be marginally more accurate if a delayed approach was adopted, but there would be less time for robust development and consideration of management action and virements.

Reasons for Decision

Members’ involvement in financial monitoring is an essential part of delivering the Council’s priorities.

The constitution requires Members to approve certain financial transactions such as virements according to approved limits.